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Please help me with this question. Why we need to include current liabilites for loan notes in capital employed? Capital employed should be equity plus non current liabilities right?
Hi,
The capital employed is equity plus net debt, with the debt being interest bearing debt. It doesn’t matter whether the debt it current/non-current, the key is that interest is charged upon it. In this instance the loan notes bear interest and so are part of the company debt and included within the calculation.
Thanks
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